Charity legal issues addressed by Law Commission

The Law Commission has published a consultation paper on technical issues in charity law, calling for responses to be sent by 3 July  2015. The comprehensive paper looks at issues arising from Lord Hodgson’s review in 2012, which  identified several legal problems faced by charities, such as amending their governing documents or  changing their organisational form. Samantha Pritchard, Associate in our Charities team is sitting  on the Charity Law Association’s working party which is providing its response on behalf of charity lawyers to the consultation.

New Charity Authorised Investment Fund Structure (CAIF)

The development of a new Charity Authorised Investment Fund Structure was announced by the government in March’s budget. The  structure will be available exclusively to Funds established for charitable purposes. Each Fund  will be registered as a charity and regulated as such by the Charity Commission. As authorised  funds the regulatory oversight will be carried out by the Financial Conduct Authority, offering  protection for investing charities.

Whilst widely replicating the main benefits of the existing Common Investment Fund structure, additional benefits will include  improved regulatory oversight, and an exemption from VAT on investment management fees, potentially  saving the charity sector up to £13m per annum.

Two charities say they will no longer provide funding to the advocacy group Cage

The Charity Commission has taken robust action and required unequivocal assurances from The Roddick Foundation and The Joseph Rowntree Charitable Trust that they have  ceased funding the advocacy group CAGE and have no intention of doing so in the future. Public  statements made by CAGE officials heightened concerns about its use of the charities’ funds and the  Charity Commission justified its decision on the basis that it was concerned that such funding  risked damaging public trust and confidence in charity. The Charity Commission subsequently issued  a regulatory alert warning charities to undertake due diligence when making grants.

HMRC launches new online charity  registration  service

On 16 February 2015, HMRC  launched a new digital service enabling applicants to register as a charity for tax purposes online. This service will eventually replace Form ChA1. Whilst a positive step  forward, the introduction of a joint HMRC and Charity Commission registration portal is more  eagerly anticipated but unfortunately the joint portal has been delayed until 2016.

SRA changes rules on charitable donations

The SRA has agreed to raise the amount law firms can donate to charity from unclaimed client account balances, from £50 to £500. Money may be withdrawn from individual client accounts and paid to charity if all efforts to locate the client have failed. This is good news for charities, and there is hope that many more firms will take advantage of this change in the rules to clear historic client accounts.